MBIA Insurance Corporation
Definition of 'MBIA Insurance Corporation'A division of publicly-traded MBIA, Inc, and a primary worldwide issuer of financial guarantee insurance. Used to back municipal bonds and structured finance products, MBIA insurance is used as an avenue to credit enhancement, as MBIA's insurance promises to pay interest and principal on any bonds that suffer an issuer default.The presence of MBIA insurance on a municipal bond typically ensures an 'AAA' rating or its equivalent from the major ratings agencies and also makes the bonds much more marketable to investors. |
|
Investopedia explains 'MBIA Insurance Corporation'Bond issuers may find they can even lower the total cost of issuing debt by purchasing MBIA insurance, as the higher rating the bonds would garner could allow the issuer to lower the coupon rate to investors.MBIA and its competitors try to keep their own credit ratings at the highest levels, as this obviously makes their services much more valuable to clients and investors. They do this by diversifying their insured portfolios across nation, sector and asset classes, and also by keeping certain measures of financial leverage below dangerous thresholds. |
Related Definitions
Articles Of Interest
-
The Basics Of Municipal Bonds
Investing in these bonds may offer a tax-free income stream but they are not without risks. -
Who Is To Blame For The Subprime Crisis?
From lenders to buyers to hedge funds, it appears everyone has blood on their hands. -
Fatal Seduction Of The Municipal Bond Insurers
Learn how a foray into CDOs and other exotic products ruined an industry's image. -
What does investment grade mean?
Credit ratings provide a useful measure for comparing fixed-income securities, such as bonds, bills and notes. Most companies are issued a rating based on their financial strength, future prospects ... -
Are my investments insured?
No. Whenever you invest in a stock, bond or mutual fund, there is no insurance against the possible loss of your initial investment. Even if you are investing in collectibles, the insurance that ... -
Earnings Guidance: Can It Accurately Predict The Future?
Explore the controversies surrounding companies commenting on their forward-looking expectations. -
Mergers And Acquisitions: Understanding Takeovers
In the dramatic world of M&As, battleground terms meld with bizarre metaphors to form the language of the game. -
Why Your Pension Plan Has Sovereign Debt In It
One type of security pensions tend to invest in is sovereign debt, or debt issued by a government. -
6 Popular ETF Types For Your Portfolio
Exchange traded funds are an extremely popular diversification tool that can protect your portfolio during troubled periods. -
Top 5 Budgeting Questions Answered
You don't need a degree to understand your money, begin saving and pay down debt.
Free Annual Reports